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Tom McPhail, head of pensions research for financial services firm Hargreaves Lansdown, said: “The reduced rate of increase now means that someone choosing to defer for one year will now have to live for around 19 years to benefit from the decision; this compares to only around 10 years under the current rate of increase of 10.4 per cent.”

He added: “It is important to bear in mind that the [current] rate of increases has been particularly generous.”

“With the population living longer and more people staying in the workforce later, it is hardly surprising that the government has chosen to cut back on this generous rate of return.

From April 2016, a new single-tier state pension of about £155 a week will replace the basic state pension, currently £113 a week.

A Department for Work and Pensions spokesman said: “It is important to set a fair deferral rate for the new state pension – which is why we asked the Government Actuary for independent advice.

“The new rate will take into account the value of income given up by delaying claiming the new state pension – so it is fair for people who defer their pension as well as those pensioners who don't.”